exv10w14w1w1



 





Exhibit 10.14.1.1




FIRST AMENDMENT TO SALE AND SERVICING AGREEMENT




     This First Amendment (this “Amendment”) to the Sale and Servicing
Agreement referenced below is entered into as of April 8, 2004, among
CapitalSource Funding II Trust, a Delaware statutory trust (the “Issuer”), CS
Funding II Depositor LLC, a Delaware limited liability company, as Depositor
(in such capacity, the “Depositor”), CapitalSource Finance LLC, a Delaware
limited liability company (“CapitalSource”), as Loan Originator (in such
capacity, the “Loan Originator”) and as Servicer (in such capacity, the
“Servicer”) and Wells Fargo Bank, National Association, successor-by-merger to
Wells Fargo Bank Minnesota, National Association, a national banking
association, as Indenture Trustee on behalf of the Noteholders (in such
capacity, the “Indenture Trustee”), as Paying Agent (the “Paying Agent”), as
Collateral Custodian (the “Collateral Custodian”) and as Backup Servicer (the
“Backup Servicer”).



R E C I T A L S:




     WHEREAS, the Issuer, the Depositor, CapitalSource, the Loan Originator,
the Servicer, the Indenture Trustee, the Paying Agent, the Collateral Custodian
and the Backup Servicer are parties to the Sale and Servicing Agreement, dated
as of September 17, 2003 (as amended, supplemented and otherwise modified from
time to time, the “Sale and Servicing Agreement”);



     WHEREAS, the Issuer has requested that certain provisions of the Sale and
Servicing Agreement be amended, on the terms and subject to the conditions set
forth in this Amendment, to (1) extend the Revolving Period an additional 364
days from the scheduled termination date, and (2) permit certain security alarm
contracts to be sold by the Depositor to the Issuer and pledged by the Issuer
to the Indenture Trustee;



     NOW, THEREFORE, in consideration of the mutual covenants and undertakings
herein contained, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:



     1. Amendments to the Sale and Servicing Agreement.




a. Section 1.01 of the Sale and Servicing Agreement is hereby
amended and supplemented by adding the following defined terms in
appropriate alphabetical order:




     “Alarm Service Loan: An Eligible Loan made by Security Leasing
Partners, L.P. to a Dealer (or any other Person agreed to by the
Issuer and the Initial Noteholder) that has secured its repayment
obligations with the payments from one or more individuals,
businesses or other entities which have entered into security alarm
monitoring or a security alarm monitoring and maintenance contracts
to receive the security alarm monitoring or a security alarm
monitoring and maintenance services provided thereby.”




     “Dealer: The security alarm dealer who sells one or more
security alarm monitoring or security alarm monitoring and
maintenance contracts to one or more Persons obligated to pay for
the service(s) provided under such contract(s).”



 









 






b. the definition of “Acquired Loans” in Section 1.01 of the Sale
and Servicing Agreement is hereby amended and restated in its
entirety as follows:




     “Acquired Loan: A Loan that is originated by a Person other
than the Loan Originator and is acquired by the Loan Originator in
a “true sale” transaction pursuant to an acquisition agreement (in
form and substance satisfactory to the Initial Noteholder) and is
otherwise acceptable to the Initial Noteholder.”




c. the definition of “Charged-Off Loan” in Section 1.01 of the Sale
and Servicing Agreement is hereby amended and supplemented by
adding the following to the end thereof:




“; provided that, with respect to any Alarm Service Loan, any such
determination shall be made from and after March 31, 2003.”




d. the definition of “Concentration Limitations” in Section 1.01 of
the Sale and Servicing Agreement is hereby amended and supplemented
by adding the following to the end thereof:




     “(xix) the aggregate Principal Balance of all Loans which are
Alarm Service Loans does not exceed Seventy Five Million Dollars
($75,000,000).”




e. the defined term “Delinquent” is hereby amended and restated in
its entirety as follows:




“Delinquent Loan: A Loan (other than a Charged-Off Loan) in the
Loan Pool as to which there has occurred one or more of the
following: (i) the occurrence of both (A) all or any portion of a
payment of interest on or principal of such Loan is not paid when
due (without giving effect to any grace period) or would be so
delinquent, but for any amendment, modification, waiver or variance
made to such Loan resulting from the Obligor’s inability to pay
such Loan in accordance with its terms and (B) within sixty (60)
calendar days of when such delinquent payment was first due, all
delinquencies have not been cured or (ii) consistent with the Loan
Originator’s Underwriting Guidelines such Loan would be classified
as delinquent by the Servicer or the Loan Originator; provided
that, with respect to any Alarm Service Loan, any such
determination shall be made from and after March 31, 2003.”




f. clause (a) of the definition of “Required Loan Documents” is
hereby amended and restated in its entirety as follows:




“(a) any Eligible Loan (other than an Assigned Loan, a
Participation Loan or an Alarm Service Loan), the duly executed
original of each of the following: the Underlying Note and an
assignment (which may be by endorsement or allonge) of such
Underlying Note, signed by an officer of the Loan Originator; any
related loan agreement, the Loan Schedule, participation agreement
(if set forth on the Loan Schedule), acquisition agreement (if set
forth on the Loan Schedule), subordination agreement (if set forth
on the Loan Schedule), intercreditor



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agreement (if set forth on the Loan Schedule), security agreements
or instruments, UCC financing statements, guarantee (if set forth
on the Loan Schedule), for each Eligible Loan secured by a
Mortgaged Property, an Assignment of Mortgage and an Assignment of
Leases and Rents and”




g. the definition of “Required Loan Documents” is hereby amended
and supplemented to add the following to the end thereof




“and (d) any Eligible Loan which is an Alarm Service Loan, the duly
executed of each of the following: the original (and to the extent
it exists, the sole chattel paper counterpart) master purchase
agreement and, if any, security agreement and a copy of the
purchase statement related to each Alarm Service Loan, signed by an
officer of the originator of such Alarm Service Loan together with
copies of any related assignment agreements, the Loan Schedule,
subordination agreement (if set forth on the Loan Schedule),
intercreditor agreement (if set forth on the Loan Schedule),
security agreements or instruments, UCC financing statements and
guarantee (if set forth on the Loan Schedule).”




h. Section 2.04(a) of the Sale and Servicing Agreement is hereby
amended and restated in its entirety as follows:




“The Loan Originator shall (i) no later than 12:00 noon New York
time on the Business Day prior to the related Transfer Date,
deliver or cause to be delivered to the Collateral Custodian, as
the designated agent of the Indenture Trustee, by facsimile
transmission or in an electronic format mutually agreed to by the
parties, a Loan Schedule and, with regard to each Loan (other than
an Alarm Service Loan) a copy of the executed Underlying Note
endorsed in blank and Assignment of Mortgage endorsed in blank, if
any, and (ii) with respect to each Alarm Service Loan transferred
to the Issuer on such Transfer Date, within four Business Days
after such Transfer Date, deliver (or caused to be delivered) to
the Collateral Custodian, the original (and to the extent it
exists, the sole chattel paper counterpart) master purchase
agreement and, if any, security agreement and a copy of the
purchase statement related to each Alarm Service Loan, and all
other Required Loan Documents for each Alarm Service Loan, and
(iii) with respect to each Loan (other than an Alarm Service Loan)
transferred to the Issuer on such Transfer Date, within two
Business Days after such Transfer Date, deliver (or caused to be
delivered) to the Collateral Custodian the original and duly
executed Underlying Note and Assignment of Mortgage, security
agreement related to each Loan (other than an Alarm Service Loan)
transferred to the Issuer, and all other Required Loan Documents
for each Loan (other than an Alarm Service Loan) (other than those
documents required to be retained by the Servicer in connection
with the servicing and administration of the Loans) (with respect
to each Loan (including each Alarm Service Loan), a “Custodial Loan
File”).”




i. Section 2.04 is hereby amended and supplemented to add the
following clause (d) to the end thereof:



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     “(d) Upon discovery by any of the Issuer, the Depositor,
CapitalSource, the Loan Originator, the Servicer, the Indenture
Trustee, the Paying Agent, the Collateral Custodian, the Backup
Servicer and/or a Noteholder of the Loan Originator’s or the
Depositor’s failure to deliver in accordance with the terms and
conditions of this Agreement and the other Basic Documents any of
the Required Loan Documents required to be included in the Loan
File for an Alarm Service Loan, the Person discovering such breach
shall give prompt written notice of such failure to the Issuer, the
Depositor, CapitalSource, the Loan Originator, the Servicer, the
Indenture Trustee, the Paying Agent, the Collateral Custodian, the
Backup Servicer and each Noteholder; provided, however, that the
failure to give such notice shall not affect the obligations of
CapitalSource and the Depositor hereunder. Unless such breach has
been waived by the Initial Noteholder or Depositor shall not have
cured such breach within five (5) Business Days of the earlier of
notice of such breach or knowledge thereof (provided that, with
respect to the original (and to the extent it exists, the sole
chattel paper counterpart) master purchase agreement and, if any,
security agreement related to an Alarm Service Loan, there shall be
no right to cure such breach), the Depositor shall repurchase from
the Issuer, and the Loan Originator shall repurchase from the
Depositor, the Loan(s) for which such failure has occurred by
paying to the Indenture Trustee the Sales Price therefor.”




j. Section 3.04(x) of the Sale and Servicing Agreement is hereby
amended and restated in its entirety as follows:




     “(x) the Loan has not been compromised, adjusted, extended,
satisfied, rescinded, set-off or modified by the Depositor, the
Loan Originator or, from and after March 31, 2003 with regard to
each Alarm Service Loan, the Obligor with respect thereto and, with
respect to each other Loan, the Obligor with respect thereto, and
no Loan is subject to compromise, adjustment, extension,
satisfaction, rescission, set-off, counterclaim, defense,
abatement, suspension, deferment, deductible, reduction,
termination or modification, whether arising out of transactions
concerning the Loan, or otherwise, by the Depositor, the Loan
Originator or, from and after March 31, 2003 with regard to each
Alarm Service Loan, the Obligor with respect thereto and, with
respect to each other Loan, the Obligor with respect thereto except
for amendments to such Loan otherwise permitted under this
Agreement and in accordance with the Underwriting Guidelines;”




k. Section 3.04(aa) of the Sale and Servicing Agreement is hereby
amended and supplemented by adding the following to the end
thereof:




“; provided that, Vytaltek Security Services, Inc. is subject to a
Bankruptcy Event but Vytaltek Security Services, Inc. is fully
performing its obligations under the related Alarm Service Loan and
has assumed, but not assigned, its obligations under the related
Loan. For greater certainty, the Alarm Service Loan to Vytaltek
Security Services, Inc. is not a DIP Loan.”



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l. Section 3.04(hh) of the Sale and Servicing Agreement is hereby
amended and restated in its entirety as follows:




     “(hh) no provision of the Loan (other than an Alarm Service
Loan) has been waived, modified or altered in any respect and, from
and after March 31, 2003, no provision of an Alarm Service Loan has
been waived, modified or altered in any respect, in each case
expect in accordance with the Underwriting Guidelines and by
instruments duly authorized and executed and contained in the
Required Loan Documents;”




m. Section 3.04 of the Sale and Servicing Agreement is hereby
amended and supplemented by adding the following clause (rr) in
appropriate alphabetical order:




	 	“(rr)	 	with respect to each Loan that is an Alarm Service Loan:
	 
	 	(i)	 	the Dealer is a Person with a place
of business in the United States or, with respect to
two (2) of the Alarm Service Loans, Canada;
	 
	 	(ii)	 	the Dealer has all necessary
licenses, permits and other authorizations to conduct
security alarm sales, installation, monitoring and
maintenance services in the jurisdiction in which it
conducts business;
	 
	 	(iii)	 	the Loan Originator has disclosed on
the related Transfer Date its calculation of the
notional minimum amount of recurring monthly revenue to
be received from each security alarm monitoring or
security alarm monitoring and maintenance contract;
	 
	 	(iv)	 	the Loan Originator makes, mutatis
mutandis, the applicable representations and warranties
set forth in clauses (a) through (pp) of this Section
3.04 with respect to (x) the accounts receivable or
accounts (as defined in the UCC) payable pursuant to a
security alarm monitoring or a security alarm monitoring
and maintenance contract, (y) each security alarm
monitoring or security alarm monitoring and maintenance
contract and (z) each Dealer; and
	 
	 	(v)	 	the scheduled payments under each
security alarm monitoring or security alarm monitoring
and maintenance contract as set forth in the related
Alarm Service Loan are true and correct and accurately
represent the recurring monthly revenue to be received
from each security alarm monitoring or security alarm
monitoring and maintenance contract.





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n. Section 8.07 of the Sale and Servicing Agreement is hereby
amended and supplemented by adding the following to the end
thereof:




     “In addition to the foregoing indemnity, each of CapitalSource
and the Depositor, jointly and severally, hereby agree to indemnify
and hold harmless the Noteholders from any liability, loss, claim
or expense incurred as a result of the Loan Originator’s or the
Depositor’s failure to deliver to the Collateral Custodian the
originally executed (and to the extent it exists, the sole chattel
paper counterpart) master purchase agreement and, if any, security
agreement related to any Alarm Service Loan. This Section 8.07
shall survive the termination of this Agreement.”



     2. Extension of Revolving Period. CapitalSource and the Initial
Noteholders hereby agree that the Revolving Period shall terminate on the
earlier of (i) unless extended by mutual agreement of CapitalSource and the
Initial Noteholder within six (6) months of the scheduled expiration date, 364
days after September 15, 2004 and (ii) the date that on which the Revolving
Period is terminated pursuant to Section 2.08 of the Sale and Servicing
Agreement.



     3. Representations and Warranties. Each of the Issuer, the
Depositor, the Servicer and the Loan Originator hereby represents and warrants
that (i) it has the power and is duly authorized to execute and deliver this
Amendment, (ii) this Amendment has been duly authorized, executed and
delivered, (iii) it is and will continue to be duly authorized to perform its
obligations under the Basic Documents and this Amendment, (iv) the execution,
delivery and performance by it of this Amendment shall not (1) result in the
breach of, or constitute (alone or with notice or with the lapse of time or
both) a default under, any material agreement or instrument to which it is a
party, (2) violate (A) any provision of law, statute, rule or regulation, or
organizational documents or other constitutive documents, (B) any order of any
Governmental Authority or (C) any provision of any material indenture,
agreement or other instrument to which it is a party or by which it or any of
its property is or may be bound, or (3) result in the creation or imposition of
any Lien upon or with respect to any property or assets now owned or hereafter
acquired by the Issuer other than pursuant to the Basic Documents, (v) this
Amendment and each of the Basic Documents to which it is a party or by which it
or its assets may be or is bound constitutes its legal, valid and binding
obligations, enforceable against it (subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and
similar laws affecting creditors’ rights generally and to general principles of
equity), (vi) except as publicly disclosed, there are not any actions, suits,
investigations (civil or criminal) or proceedings at law or in equity or by or
before any Governmental Authority pending or, to its knowledge, threatened
against or affecting it or any of its business, property or rights (1) which
involve any Basic Document or the Loan Documents or (2) which would be
materially likely to result in a Material Adverse Effect, (vii) it is not in
default or violation with respect to any law, rule or regulation, judgment,
writ, injunction or decree order of any court, governmental authority,
regulatory agency or arbitration board or tribunal and, with respect to the
Loan Originator and Depositor, the effect of which would have a material
adverse effect on its business, assets, operations or financial condition and
(viii) no Default or Event of Default has occurred or is continuing. Except as
expressly amended by the terms of this Amendment, all terms and conditions of
the Sale and Servicing Agreement shall remain in full force and effect and are
hereby ratified in all respects. The Initial Noteholder shall not object to
the conveyance



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to the Issuer of the Alarm Service Loans set forth on Schedule 1 hereto
based on a breach of Section 3.04(i)(iii) or Section 3.04(i)(vi). The Initial
Noteholder does not object to the execution of this Amendment by Wilmington
Trust Company or the Issuer.




     4. No Reliance. Each of the Loan Originator, the Depositor and the
Issuer hereby acknowledges that it has not relied on the Initial Noteholder or
any of its officers, directors, employees, agents and “control persons” as such
term is used under the Act and under the Securities Exchange Act of 1934, as
amended, for any tax, accounting, legal or other professional advice in
connection with the transactions contemplated by this Amendment or the Basic
Documents, that each of the Loan Originator, the Depositor and the Issuer has
retained and been advised by such tax, accounting, legal and other
professionals as it has deemed necessary in connection with the transactions
contemplated by this Amendment and the Basic Documents and that the Initial
Noteholder makes no representation or warranty, and shall have no liability
with respect to, the tax, accounting or legal treatment or implications
relating to the transactions contemplated by this Amendment and the Basic
Documents.



     5. Defined Terms; Headings. All capitalized terms used herein,
unless otherwise defined herein, have the same meanings provided herein or in
the Sale and Servicing Agreement. The headings of the various Sections of this
Amendment have been inserted for convenience of reference only and shall not be
deemed to be part of this Amendment.



     6. Limited Amendment. This Amendment is limited precisely as
written and shall not be deemed to (a) be a consent to a waiver or any other
term or condition of the Sale and Servicing Agreement, the other Basic
Documents or any of the documents referred to therein or executed in connection
therewith or (b) prejudice any right or rights the Noteholders may now have or
may have in the future under or in connection with the Sale and Servicing
Agreement, the other Basic Documents or any documents referred to therein or
executed in connection therewith. Whenever the Sale and Servicing Agreement is
referred to in the Sale and Servicing Agreement or any of the instruments,
agreements or other documents or papers executed and delivered in connection
therewith, it shall be deemed to mean the Sale and Servicing Agreement, as the
case may be, as modified by this Amendment. Except as hereby amended, no other
term, condition or provision of the Sale and Servicing Agreement shall be
deemed modified or amended, and this Amendment shall not be considered a
novation.



     7. Construction; Severability. This Amendment is a document
executed pursuant to the Sale and Servicing Agreement and shall (unless
otherwise expressly indicated therein) be construed, administered or applied in
accordance with the terms and provisions thereof. If any one or more of the
covenants, agreements, provisions or terms of this Amendment shall be held
invalid in a jurisdiction for any reason whatsoever, then, in such
jurisdiction, such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions or terms of this
Amendment and shall in no way affect the validity or enforceability of the
other covenants, agreements, provisions or terms of this Amendment.



     8. Counterparts; Facsimile Signature. This Amendment may be
executed by the parties hereto in several counterparts, each of which shall be
deemed to be an original and all of which shall constitute together but one and
the same agreement. The parties may execute



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facsimile copies of this Amendment and the facsimile signature of any such
party shall be deemed an original and fully binding on said party.




     9. Governing Law. This Amendment shall be governed and construed
in accordance with the applicable terms and provisions of Section 13.05
(Governing Law) of the Sale and Servicing Agreement, which terms and provisions
are incorporated herein by reference.



     10. Limitation on Liability. It is expressly understood and agreed
by the parties hereto that (a) this Amendment is executed and delivered by
Wilmington Trust Company, not individually or personally, but solely as Owner
Trustee of CapitalSource Funding II Trust, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating
any liability on Wilmington Trust Company, individually or personally, to
perform any covenant either expressed or implied contained herein, all such
liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Amendment or any other related
documents.



     11. Recordation of Amendment. To the extent permitted by applicable
law, this Amendment, or a memorandum thereof if permitted under applicable law,
is subject to recordation in all appropriate public offices for real property
records in all of the counties or other comparable jurisdictions and in any
other appropriate public recording office or elsewhere, such recordation to be
effected by the Servicer at the Securityholders’ expense on direction of the
Majority Noteholders but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Securityholders or is necessary for the administration or servicing of
the Loans.



     12. Successor and Assigns. This Amendment shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.



[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]




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     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to
the Sale and Servicing Agreement to be duly executed by their respective
authorized officers as of the day and year first written above.



	 	 	 	 	 
	 	 	CAPITALSOURCE FUNDING II TRUST,
	

	 	By:
	 	Wilmington Trust Company, not in
its individual capacity but solely as Owner Trustee
	 
	 	 	 	 
	

	 	By:
	 	/s/ Pierrette Bradshaw
	

	 	 	 	
 
	

	 	Name:
	 	Pierrette Bradshaw
	

	 	Title:
	 	General Counsel
	 
	 	 	 	 
	 	 	CS FUNDING II DEPOSITOR LLC,
	 	 	as Depositor
	 
	 	 	 	 
	

	 	By:
	 	/s/ Pierrette Bradshaw
	

	 	 	 	
 
	

	 	Name:
	 	Pierrette Bradshaw
	

	 	Title:
	 	General Counsel
	 
	 	 	 	 
	 	 	CAPITALSOURCE FINANCE LLC,
	 	 	as CapitalSource, Loan Originator and Servicer
	 
	 	 	 	 
	

	 	By:
	 	/s/ Pierrette Bradshaw
	

	 	 	 	
 
	

	 	Name:
	 	Pierrette Bradshaw
	

	 	Title:
	 	General Counsel






[Signature Pages to Fifth Amendment to Amended and Restated Senior Secured Credit Agreement]


 









 






	 	 	 	 	 
	 	 	WELLS FARGO BANK, NATIONAL ASSOCIATION, successor-by-merger to Wells Fargo Bank
Minnesota, National Association as Indenture Trustee, Collateral Custodian,
Paying Agent and Backup Servicer
	 
	 	 	 	 
	

	 	By:
	 	/s/ Jeanine C. Casey
	

	 	 	 	
 
	

	 	Name:
	 	Jeanine C. Casey
	

	 	Title:
	 	Corporate Trust Officer





[Signature Pages to Fifth Amendment to Amended and Restated Senior Secured Credit Agreement]


 










 






	 	 	 	 	 
	 	 	ACKNOWLEDGED AND AGREED:
	 
	 	 	 	 
	 	 	CITIGROUP GLOBAL MARKETS REALTY
	 	 	CORP., as Initial Noteholder
	 
	 	 	 	 
	

	 	By:
	 	/s/ John Eck
	

	 	 	 	
 
	

	 	Name:
	 	John Eck
	

	 	Title:
	 	Vice President





[Signature Pages to Fifth Amendment to Amended and Restated Senior Secured Credit Agreement]